NFO alert: Two mutual fund houses roll out new schemes on tech theme; should you invest?

A couple of mutual fund houses have recently rolled out new fund offers (NFOs) on the information technology (IT) and software theme. These schemes are Motilal Oswal Digital India Fund and White Oak Capital Digital Bharat Fund. The former will be launched for public subscription on October 11 and close on October 25.

Similarly, White Oak AMC's Capital Digital Bharat Fund was launched on September 20 and closed on Friday, October 4.

Here we share more details about Motilal Oswal Digital India Fund which is set to open next week for public subscription:

What kind of mutual fund scheme is this?

This is a thematic mutual fund that focuses on technology, telecom, media, entertainment, and related ancillary sectors.

What is the main objective of investing in this fund?

The primary investment objective of the scheme is to generate long-term capital growth by predominantly investing in digital and technology-dependent companies, hardware, peripherals and components, software, telecom, media, internet and e-commerce, and other companies engaged in or leveraging digitisation.

How can you invest in this scheme?

You can invest ₹500 in the new fund offer and in multiples of Re 1 thereafter. For lumpsum, you can invest ₹500 and in multiples of Re 1 thereafter. Those who want to invest via a systematic investment plan (SIP) can invest ₹100 daily, ₹500 weekly, fortnightly or monthly and ₹1,500 quarterly.

If the SIP date is not specified or ambiguous, the SIP transaction will be processed on the seventh of every month in which the application for SIP registration was received. If the end date is not specified, the SIP will continue until it receives a termination notice from the investor.

Are there similar mutual funds in the market?

Tata Mutual Fund runs a similar scheme called Tata Digital India Fund. As mentioned above, White Oak Mutual Fund has launched Capital Digital Bharat Fund.

How will the scheme benchmark its performance?

The scheme's benchmark is BSE Teck TRI.

Where will the scheme invest?

The scheme will invest a minimum of 80 per cent in equity and equity-related instruments of technology-driven companies engaged in the digitisation space and a maximum of up to 100 per cent. The allocation to equity of companies other than these would be anywhere between 0 and 20 per cent.

The units issued by REITs and InvITs would be anywhere between 0 and 10 per cent. The mutual fund units would be anywhere between 0 and 5 per cent.

Are there any entry or exit loads to this scheme?

The scheme has an exit load of 1 per cent if redeemed on or before 3 months from the date of allotment. There will be nil exit load if redeemed after 3 months from the date of allotment.

Who will manage this scheme?

The scheme will be managed by fund managers Ajay Khandelwal, Niket Shah, Santosh Singh, Atul Mehra, Rakesh Shetty and Sunil Sawant.

Does the fund contain any inherent risk?

According to its risk-o-metre, the scheme carries very high risk and is, therefore, suitable for investors seeking long-term capital appreciation.